The bottom of the ad reads: "Your City. Your Drugstore. DUANE READE." As seen on the M train
I was sitting on the M-train crossing over the East River and looked up to read this sign. I thought it was a really clever, public health-related ad that incorporated the City as part of its campaign. It is so effective, not just because it makes you stop and feel a little grossed out, but also because it makes you feel as if you are part of something unique, special and personalized: the New York City subway system. It’s “Your City. Your Drugstore.” It makes me want to go out and buy Purell right now.
Businesses are used to spending lots and lots of money on advertising campaigns–its no secret. But, I am actually less interested in talking about advertising and more interested in talking about Duane Reade’s ability to work the City. As this advertisement shows, Duane Reade knows its audience (New Yorkers), but what you may not know is that it also knows the City, very, very well. Part of my day-job involves retail attraction and in an effort to learn as much as possible about urban retail attraction, I attended a seminar by Michael Berne of
MJB Consulting earlier this year who brought up Duane Reade as a case study. Duane Reade’s incomparable success in NYC is related to its flexible and creative real estate needs. Most big-box retail, like CVS, Walgreens, etc., have very specific requirements when it comes to real estate leasing: very specific square-footage, layouts, one floor, etc. Not so for Duane Reade. They’ll take anything as long as it’s at a good location. I thought this quote from a 2005 NY Mag
article was pretty hilarious and accurate:
The company [Duane Reade] understands two important things: New Yorkers are uniquely harried shoppers, and the whole ball game comes down to real estate. Duane Reade has used its skill at that quintessential New York blood sport to cut rents by shoehorning its stores into bizarre locations other chains wouldn’t touch.
The article goes on to give some specifics about Duane Reade’s real estate strategy:
While most pharmacy chains run in fear from multi-floor, non-box layouts, he embraces them. Forty-nine of his stores have two floors, and they come as small as a studio apartment (under 500 square feet) and as large as a suburban supermarket (a 17,200-square-foot box in Flatlands, Brooklyn). Odder spaces include a store at 62nd Street and Broadway with a basement described as “kind of a triangle with a leg on it,” and an old theater on East 86th Street with 1,300 square feet on the ground floor and 12,000 upstairs.
Duane Reade’s flexibility in terms of their space requirements has given them a substantial edge on other NYC pharmacies, who were much slower to adopt this practice. However, the payoff for the company has been substantial. According to the article, when Duane Reade acquired a space in Times Square in 2000 the going rate was $250 per square foot in that neighborhood. However, basement retail space was going for $85 a square foot–and that is where Duane Reade located: in the basement.
Tom Bow, senior vice-president for the Durst Organization, which leased the space [to Duane Reade, said:] “Most tenants wouldn’t be able to take that space, but they could,” says Bow. “They understood that Times Square was a 24/7 location. They just knew the local market.”
The moral of the story: Well, there might be two morals. One: Understand your audience and understand your market. That may sound pithy, but you may be sacrificing opportunities by not accurately understanding people’s interests. Take time to do this important research. Two: Break out of the box! Blaze your own trail! Find creative and new solutions to your problems or to your existing strategies…you never know when you could be doing something better if you don’t investigate new options and test them out.
